#OT# Cause of economic crisis identified

I don't want to start an argument here, but, although I wouldn't couch it as "blame," there's an underlying truth in what he says. It's actually the result of something the Chinese government did to start it all, rather than the Chinese people, who were just acting rationally in response to circumstances.

China has built its economy on an all-out mercantilist policy, something like 17th-century England, or early 19th-century US. They pushed exports and manipulated their currency and economy to keep it going. By keeping their currency undervalued they discouraged consumer spending. So they're awash in cash.

Countries that jump-start their economies with mercantilism (Japan in the '60s - '80s; the Asian Tigers; etc.) usually can't stop once they've started, until something crashes. One hopes that they're crashing now -- it will be good for them as well as for the rest of us.

You can't (or I can't) blame China for acting like this. It would have been nice if they had smoothly transitioned to a consumer economy and balanced trade, but there aren't any examples in history that I know of in which a government has been able to do that. It's no surprise they dumped their cash into our securities, because there's hardly any other place they could put it, given that they had to keep us well-supplied with cash in order to buy their junk and they were hardly buying anything from us -- because they couldn't, because their economic policy kept their currency undervalued, and so on around an endless circle. Economists would have preferred they sink it into their own economy, but economists don't run the show.

Good conservative doctrine (a la Milton Friedman) says this all would have worked out in the end, because running a negative trade balance should have caused the dollar to tank, in which case we'd join them at Third-World wage rates and we'd pay off our debt in devalued dollars, which would piss them off but which would be good for all our souls. Unfortunately, Milton Friedman misjudged the time frames for this all happening. Current estimates are that it will be sometime between the time we're all dead, and the time the sun is extinguished.

That's what happens when you just roll with it.

-- Ed Huntress

========== Who would have thought that the Chinese leadership would do what is best for China --- and after all we have done for them... What a bunch of ingrates...

And just where were/is the American leadership that were/is doing what was/is best for America and Americans, while all this was going on? What a bunch of "maroons." :-(

No matter how thin you slice the baloney, we 100% brought this on ourselves.

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Well, we could have done what was best for us, such as demanding countertrade to keep from devestating some segments of our economy. Virtually every other country in the world does that. We don't, because we're supposedly the ones pushing for "unfettered free trade."

It's stupid and self-destructive. Everyone who knows any economics knows that a wealthy China will be good for everyone, and I have no objection to encouraging that. But not at our expense. The conservative economic philisophy that gave us the derivative fiasco has done a lot more damage than most people realize, or than those economic conservatives would ever admit. They'd show us tables and graphs to prove how our GDP is doing just fine. Then they'd tell us it will all trickle down, and that we should pull ourselves up by our bootstraps in the meantime.

It's easiest to convince oneself that it's the proper posture from 30,000 feet, from the inside of a Gulfstream jet.

-- Ed Huntress

Like Tonto said to the Lone Ranger when they were surrounded by Indians, "what do you mean we?" The fact is "we" didn't bring this on ourselves; it was done to us by our leaders. From 1980 on most of those leaders have been conservatives and it's the conservative agenda of deregulation, globalism, militarism, low taxes on the wealthy, and free and unregulated trade, that have brought us to this point. It's true that many Democrats joined in with this idiocy but the driving force in this country for the last 28 years has been conservatism. If you don't believe me just ask Rush Limbaugh. One of the hallmarks of that philosophy is to deny any responsibility when things don't go right. Blaming everyone but business, money, and the republican party, is standard procedure for them. Unfortunately for them it's not working this time because everybody knows who has been in control.

None of the problems we are now having were inevitable either except for the fact that conservative philosophy has ruled the country for decades. Had we pursued different policies both in foreign affairs and economic ones they would have brought a different outcome entirely. For example, had Al Gone been president it's extremely unlikely that there would have been an Iraq War at all. Had not Bush been elected twice we would not have allowed the unfettered free market to run amok. So I have to take offense to be included in the "we" that is responsible for our problems. Especially when I was four square against virtually all republican policies since Reagan got in office. As much as we wish we could lay the blame on others like the Chinese and the Arabs the truth is it was those in positions of power who made the decisions that are to blame. For 28 years those people were republicans (in their Gulfstreams). So blame them not us. They're policies are what got us here. Oh, yeah, you can also blame all the idiots who kept those incompetent and corrupt republicans in office for so many years too. The republican party never could have done it without them.

Hawke